You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5.8 million and cost of goods sold of $3.48 million. You will be depreciating a $2 million machine for 5 years using straight-line depreciation. Your tax rate is 33%. Finally, you expect working capital to increase from $190,000 in year 2 to $305,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3? Complete the following pro forma statement. (Round to the nearest dollar.) Pro Forma Year 3 Sales $ COGS Depreciation EBIT Tax Earnings Depreciation Net working capital Free cash flows
You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5.8 million and cost of goods sold of $3.48 million. You will be depreciating a $2 million machine for 5 years using straight-line depreciation. Your tax rate is 33%. Finally, you expect working capital to increase from $190,000 in year 2 to $305,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3? Complete the following pro forma statement. (Round to the nearest dollar.) Pro Forma Year 3 Sales $ COGS Depreciation EBIT Tax Earnings Depreciation Net working capital Free cash flows
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of
depreciating a
free cash flows for year 3?
$5.8
million and cost of goods sold of
$3.48
million. You will be $2
million machine for
5
years using straight-line depreciation. Your tax rate is
33%.
Finally, you expect working capital to increase from
$190,000
in year 2 to
$305,000
in year 3. What are your pro forma earnings for year 3? What are your pro forma Complete the following pro forma statement. (Round to the nearest dollar.)
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Pro Forma
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Year 3
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Sales
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$
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COGS
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Depreciation
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EBIT
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Tax
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Earnings
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Depreciation
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Net working capital
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Free cash flows
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